ASEAN Economic Bulletin Vol. 23, No. 1 (2006), pp.

5774 ISSN 0217-4472 print / ISSN 1793-2831 electronic

DOI: 10.1355/ae23-1e

The New Indonesian

Social Security Law
A Blessing or Curse for Indonesians?

Alex Arifianto

The Indonesian Government has recently passed a new national social security law, which
supporters have said would make the existing social system works better for the
beneficiaries and would extend social security coverage to more workers and their families,
both in the formal and informal sector. However, opponents have stated that the new law is
flawed in many ways. The paper attempts to critically analyse the law and to predict its
possible impacts on Indonesian workers and economy in general. From this analysis, we
can conclude that there are several serious flaws in the government plan as outlined in the
new law, such as a worsening of Indonesias labour market conditions, financial
unsustainability, and added pressures on the state budget. Also, it does not allow
competition in the provision of social security benefits to Indonesians. A better policy would
be to strengthen the family support system, which has been the major source of old-age
support for elderly Indonesians. In addition, Indonesia should seriously consider adopting
a social security scheme based on the widely used multipillar approach to replace the
current public social security monopoly.

Keywords: social security, ageing, pension reform, Indonesia.

I. Introduction Soekarnoputri signed it. A task force appointed

On 28 September 2004, the Indonesian House of
Representatives (Dewan Perwakilan Rakyat, or
DPR) endorsed the law on the National Social
Security System (Undang-Undang Sistem Jaminan
Sosial Nasional, or SJSN). The law became a
public law (Law No. 40/2004) on 19 October
2004, after outgoing President Megawati
through the Vice-Presidents Office, first created
by the Presidential Decree (Kepres) No. 22/2002,
drafted the law. The members of the task force
were representatives of sectoral ministries
concerned with social security provision in
Indonesia, such as the Ministries of Social Welfare
(Kesra), Manpower, Health, Social Affairs,

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2006 ISEAS

05 Arifianto 57 4/21/06, 9:57 AM

 Economic Affairs (Ekuin), Finance, and
Development Planning (Bappenas). No
representatives from stakeholders such as
employers associations and labour unions were
included in the drafting team.
The key feature of the new law is that it
mandates the creation of several social security
schemes for citizens: old-age pension, old-age
savings, national health insurance, work injury
insurance, and death benefits for survivors of
deceased workers. The schemes would be financed
by a payroll tax imposed on workers wages,
collected equally from employers and workers,
mostly in the formal sector.
The passage of Law No. 40/2004 means that the
existing social security programmes in Indonesia
would be expanded to cover not only civil servants
(Taspen and Askes schemes) and private formal
sector workers (Jaminan Sosial Tenaga Kerja, or
Jamsostek), but would eventually cover all
Indonesian citizens, particularly those who are
working in the informal economy. Indeed, the law
mandates that within the next two to three decades
social security coverage in Indonesia should be
expanded to the informal sector, the unemployed,
and the poor.
While it is assumed that many parties would
welcome the coverage of social security benefits,
such as pension, health, and work injury
insurance, the passage of Law No. 40/2004 was
opposed by many stakeholders who are directly
involved with the issue of social security provision
including employers associations, labour
unions, pension and healthcare companies, and
independent economists. This is because, as would
be elaborated further in this paper, the new law
contains several serious flaws that would make its
implementation problematic. It is being made
contrary to the consensus among social security
experts and policy-makers. In addition, the law
does not take into account the traditional family
support system that has been the main provider
of old-age income security for most elderly
Indonesians today.
The remainder of this paper is divided into the
following sections. Section II describes the current
social security arrangements available for
ASEAN Economic Bulletin
05 Arifianto 58
Indonesians today, both through traditional
support and through formal channels (mainly the
government). Section III describes major
provisions of the social security law in detail.
Specifically, the paper takes a closer look at the
retirement benefit provisions under the new law.1
Section IV is a critical analysis of these
provisions. It explains why the retirement benefit
provisions would endanger the welfare of most
Indonesian workers instead of improving their
welfare, and how it would create serious problems
to the Indonesian economy. Section V contains
policy recommendations aimed at reforming the
newly enacted law so that it would be in line with
the existing consensus on social security policy
based on international experience. Section VI
concludes the paper.
II. Current Social Security Arrangements
in Indonesia
For more than three decades, Indonesia has made
significant progress in its economic and human
development. This has resulted in better health
conditions for Indonesians and longer life
expectancy. The countrys life expectancy has
increased dramatically during the last three
decades, from 45 in 1970 to 66 in 2004 (UNDP
2003). Consequently, the number of Indonesians
aged 60 years and above has increased from 4.48
per cent of the population in 1971 to 7.97 per cent
in 2000 (ADB 2004, p. 47).
During the past three decades, Indonesia has
also successfully implemented the family planning
(keluarga berencana) programme, which has
reduced the number of children born into typical
Indonesian families. While in the early 1950s
the average Indonesian family consisted of six
children and their parents, in the 1990s the typical
Indonesian family consisted of approximately 2.5
children and their parents (United Nations 1999).
At the same time that birth rate has declined, the
number of older Indonesians has increased at a
rapid rate. It is estimated that by 2020, about 11.34
per cent of the population will comprise of elderly
Indonesians over 60 years old (ADB 2004, p. 47).
This trend will continue for the forseeable future.
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 It is estimated that in the year 2050, about one-
third of all Indonesians will be 55 years old or
older and nearly one-fifth will be 65 years or older
(U.S. Census Bureau 2004).
It is estimated that currently about half of all
Indonesias elderly are still active in the labour
force, mostly in the informal and agriculture
sectors (Koesoebijono and Sarwono 2003, p. 391).
However, most of these elderly have difficulty in
supporting themselves, with an average income of
Rp500,000 (about US$55) per annum in 1999
(Hatmadji, Mundiharno, and Pardede 1999, p. 48).
Because of their lack of earnings, a large number
of them (about 45 per cent) have to rely on family
support, while 31.5 per cent are self-employed.
Their only asset is often their house or land
(Hatmadji and Pardede 1999).
The rapid ageing of Indonesias population
within the next two to three decades will no
doubt create various public policy implications
for the country. There will be a greater demand
for old-age income support schemes as more
Indonesians are getting older, and eventually as
their health deteriorates, they will have to leave
the labour force. The increased number of the
elderly in the countrys population will also
result in an increased demand for medical care
and services for this sector of the population. As
a result, health expenditure as a percentage of
the gross national product (GNP) could be
expected to increase as well.
Historically, old-age policy has not been a
major priority for the Indonesian Government,
due to the fact that the number of elderly
Indonesians (60 years and above) only formed
a small percentage of Indonesias population.
Responsibility for the care of the elderly largely
fell on their families, since it was assumed that
productive citizens would take care of their
aged and infirmed parents. Very little government
resources were allocated to assist elderly
Indonesians, especially those who are poor and/or
have no immediate family members to assist them.
In the past, most elderly Indonesians could rely
on the extended support of their families, both as
caregivers during the onset of health problems
and also as providers of supplemental financial
ASEAN Economic Bulletin
05 Arifianto 59
support. Unfortunately, the rapid ageing of
Indonesias population is occurring at about the
same time the country is undergoing rapid
modernization and recovering from the impact of
the 1997/98 Asian financial crisis.
Modernization has brought many changes that
affect the family support system in Indonesia.
The national family planning programme has
succeeded in significantly reducing Indonesias
birth rate. While this policy has resulted in
reduced family expenditure for the support of
children, it also means that elderly Indonesians
will be supported by fewer children when they
enter old age. This, of course, could reduce the
amount of support they will receive from their
children in old age.
Among other changes in the family brought
about by modernization is the increased likelihood
that younger family members who are still in the
labour force migrating to other cities or countries,
where it is perceived to offer more job
opportunities. While they might be able to earn
more in the other city or country, younger family
members will be living further away from their
elderly parents. As a result, the likelihood of
children fulfilling their traditional role as their
parents caregivers in times of need is reduced
(Hugo 1996, p. 17).
Consequently, support for elderly Indonesians is
increasingly shifting from personal care, in which
the elderly receive direct emotional and physical
care from their own children or family members,
to a more impersonal and financially oriented
system, in which assistance is given in the form of
cash or through hired assistants such as nurses
and domestic help (Koesoebijono and Sarwono
2003, p. 394). Thus, while some elderly
Indonesians might enjoy adequate financial
support, they lack the personal care and attention
that could only be provided by family members.
As a result of these shortcomings, the
Indonesian elderly increasingly have to turn to
third-party institutions for their care. These
services could come from the government or
the private sector, both profit and non-profit
organizations, such as nursing homes, hospitals
and clinics. However, resources provided by these
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 institutions are limited. Only about 10 per cent of
Indonesians (workers and their spouses) have
some form of pension coverage,2 while only 15
per cent of Indonesians are currently covered by
some form of health insurance scheme provided
by either the public or the private sector3 (ILO
2003). In addition, it is virtually impossible for
those aged 65 years and above to receive health
insurance coverage, even though this age group is
more vulnerable to serious medical problems (ILO
2003, p. 193). Finally, social assistance spending
for elderly Indonesians still receives a low priority
in the governments budget. In the 2004 state
budget, the government only allocated Rp21.5
billion (US$236,000) for such services (ADB
2004, p. 99), an amount that is far from sufficient
in meeting the needs of elderly Indonesians.
The remainder of this section will describe the
government-run social security scheme for private
social security workers commonly called
Jamsostek.4 The previous Indonesian Social
Security Law (Law No. 3/1992) stipulates that the
premiums for worker injury, death, and healthcare
benefits are paid entirely by employers, while the
retirement benefit premiums are shared by both
employers and workers. Worker injury, death, and
retirement benefits are invested in the Jamsostek
provident fund managed by a state-owned
company, PT Jamsostek. Healthcare programme
can be contracted out to a private provider if it
can show that the benefits would be either similar
to or more than the benefits provided by PT
Jamsostek (ILO 2003, p. 93).
TABLE 1
Contributions/Premiums for the Jamsostek Programme (% of wages)
Programme
Workplace Accident Benefits Programme (JKK)
Death Benefits Programme (JK)
Retirement Benefits Programme (JHT)
Healthcare Benefits Programme (JPK)
Total
SOURCE: PT Jamsostek (2001).
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05 Arifianto 60
Table 1 shows the specific social security
premiums that have to be paid by both employers
and workers. Each employer has to make a
contribution of between 7.24 and 11.24 per cent of
the total wages paid to their workers. This amount
is equal to about one month of a workers annual
salary.5 In addition, each worker has to contribute
2 per cent of his or her wages to the retirement
benefits programme.
However, critics of the Jamsostek scheme have
stated that the existing social security system has
failed to prevent those affected by the Indonesian
economic crisis from falling below the poverty
line. This is because the current system is
inadequate in many ways. First, it does not cover
informal sector workers (self-employed workers)
and formal sector workers in small businesses
(with ten employees or less). This means that the
vast majority of Indonesian workers (80 per cent
of the total workforce) are not covered by this
scheme. In addition, it is also estimated that
only about half of the employers required by
the Indonesian Social Security Law to make
contributions to the scheme are actually making
contributions (ILO 2003; FIRST Initiative 2005).
Thus, the number of workers that are actually
covered by the Jamsostek programme is
abysmally low.
Additionally, Jamsostek does not create
adequate incentives for its members to save for
retirement because the benefits received by those
who make contributions to Jamsostek are very
small. A World Bank study done by Leechor
Employers Workers Total
0.241.74 0.241.74
(5 classes)
0.3 0.3
3.7 2 5.7
36 36
7.2411.74 2 9.2413.74
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 (1996) estimates that the total retirement benefits
received by a Jamsostek recipient at retirement is
valued at about 7 per cent of their final basic
salary after thirty-five years of active work.
Another study conducted by the International
Labour Organization (ILO) found that the average
value of Jamsostek benefits only amounts to five
and a half months of their basic salary or eight and
a half months of the current minimum wage
(UMR)6 (ILO 2003, p. 90). It has been concluded
that these workers would earn a better rate of
return on their investments if they put their
retirement savings into a bank account rather than
the Jamsostek scheme.
In addition, the rate of return on investments in
the Jamsostek fund is also very low. The ILO
found that income from such investments is
valued cumulatively at 38 per cent below the level
of inflation and 63 per cent less than the average
market rate (ILO 2003, p. 94). This is caused by
the fact that the Jamsostek fund is invested mostly
in banks 80 per cent in 1997 and 86 per cent in
June 1999 (Perwira et al. 2003). While such an
investment is considered relatively safe, in the
long run it earns less than other investment
schemes, such as those invested in stocks, bonds,
and mutual funds.
Finally, critics have argued that the management
of the Jamsostek fund has not been open and
transparent. For instance, it has been found that PT
Jamsostek as the sole provider of publicly funded
retirement benefits in Indonesia has failed to
provide financial statements and regular progress
reports that can be accessed by workers
participating in the scheme and the general public
(Leechor 1996, p. 39).
When we look at the level of benefits received
by workers covered by Jamsostek, combined with
the low return on investment and lack of
transparency, it is no wonder that most Indonesian
employers and employees have little faith in the
scheme providing social protection for them. The
fact that only about half of all employers who are
required to participate in the Jamsostek scheme
are making contributions to the scheme is
testament to the low confidence of employers and
employees in the Jamsostek scheme.
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05 Arifianto 61
In conclusion, the state of the Indonesian
elderly is clearly at a crossroads. Since their
number is increasing rapidly, there will be greater
demands from this group for both old age income
support schemes and healthcare. Unfortunately,
the traditional family support systems that these
elderly tend to rely on are increasingly becoming
strained due to the fact that Indonesian family
size continues to decline and also due to other
changes resulting from modernization (for
example, outmigration to cities and other
countries and more formalized family relations
based on financial rather than personal needs). At
the same time, third-party infrastructure available
to support elderly Indonesians is still
underdeveloped, given the lack of available
schemes provided by the government to support
the needs of the elderly population and the poor
governance of existing publicly run social
security schemes such as Jamsostek.
III. The New Social Security Reform Law:
An Overview
As have been mentioned in Section I above, the
DPR passed the new Indonesian Social Security
Law on 28 September 2004, which was signed by
outgoing President Megawati on 19 October 2004.
The law itself is very short on the details of how
the new social system (popularly known as
Jamsosnas or Jaminan Sosial Nasional) would
look like, including on amounts of benefits,
contribution rates, rules regulating how the funds
collected would be invested, and on the sanctions
that would be applied if the fund is being
misappropriated. The law only states that these
issues would be detailed later on in government
regulations, which in Indonesia are written
exclusively by bureaucrats from related ministries
(such as the Ministries of Manpower, Health, and
Finance) and do not require approval from the
DPR. Commentators attributed the lack of details
within the new social security law to the pressures
to adopt the law before the term of the Megawati
government ended, which requires many
compromises that could only be reached quickly
by removing contentious and debatable clauses
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 from the law; hence reducing its substantive
provisions to a minimum. The end result is an
ambiguous law, with language that can be
diversely interpreted (FIRST Initiative 2005).
The main provision of the law is Article 17,
which makes membership compulsory to all
Indonesian citizens and permanent residents and
obliges employers and participants to contribute
certain percentages of wages. For non-wage
earners, nominal amounts are be stipulated.
Participants are defined as employees registered
by their employer, self-employed workers who
would have to register themselves, and poor/
indigent citizens registered by the Indonesian
Government. The government would be
responsible for paying contributions to the poor
and financially disabled persons, although initially
it is only responsible to pay for the contributions
to the National Health Insurance programme (GOI
2004a).
There are no stipulations about minimum or
maximum amounts of benefits or contributions or
other parameters; such details are to be stipulated
by future government regulations. Contributions
would be shared equally between employers and
workers except for the death benefit and workers
compensation schemes where only the employer
contributes. However, while the official
contribution rates for the different Jamsosnas
schemes are still unknown, we could estimate the
rates for the Jamsosnas pension and death benefits
programmes based upon the current Jamsostek
contribution rate, assuming that within the first
few years of operation, they will not be much
different from existing rates.
The contribution rate for the retirement benefit
programme is estimated to be around 16 per cent
of ones base salary: 10 per cent for the old-age
pension scheme and 6 per cent for the old-age
savings programme (the current contribution rate
for Jamsostek provident fund). The contribution
rate for the National Health Insurance programme
is estimated at 6 per cent (the current contribution
rate for family coverage of Jamsostek health
insurance scheme). Employers and workers will
share these contributions equally. The work injury
insurance contribution rate would be between 0.24
ASEAN Economic Bulletin
05 Arifianto 62
per cent and 1.75 per cent, depending on the
degree of the injury. Finally, the death benefit
programme is estimated to be the same as the
Jamsostek death benefit scheme (currently 0.3 per
cent of ones base salary). The latter two
programmes would be solely paid for by
employers. From these figures, we can estimate
the total cost of the Jamsosnas programme for
formal sector workers to be between 22.54 per
cent and 23.75 per cent of a formal sector
workers wages7 (see Table 2).
A National Social Security Board (Dewan
Jaminan Social Nasional, or DJSN) will be set up
to oversee the programme. It will consist of
fifteen members, including representatives from
central government ministries/agencies, business
associations, and labour unions. The members will
be appointed for a term of five years, which may
be renewed for an additional five years. The
President would select the members, following
consultation with the Coordinating Ministry of
Social Welfare (Kesra) (GOI 2003, pp. 1617; and
GOI 2004, Chapter IV).
The day-to-day management of the national
social security programme will be carried out by
National Social Security Provider Agencies
(Badan Penyelenggara Jaminan Sosial, or BPJS).
Responsibilities of these agencies will include
ensuring workers make monthly contributions to
the national social security fund, issuing social
security identification numbers to every citizen in
Indonesia, and managing the national social
security fund. The management of these agencies
will be appointed according to the procedures
described in future government regulations (GOI
2004, Article 47).
The National Social Security Agencies will
consist of the existing social security provider
agencies: PT Jamsostek (which manages the
pension and health insurance programmes for
formal private sector employees), PT Askes
(which manages health insurance for civil
servants), PT Taspen (which manages the pension
programme for civil servants), and PT Asabri
(which manages the pension programme for those
in the armed forces). These companies will
continue to operate their respective programmes
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 TABLE 2
Estimated Jamsosnas Contributions/Premiums for Formal Sector Workers
(% of wages)

Programme Total Current Total Known Total Jamsosnas

Contribution Rates Jamsosnas Contribution
of Jamsostek Contribution Rates
Rates (Estimated)
Workplace Accident Benefits Programme 0.241.74 0.241.75 0.241.75
(5 classes)
Death Benefits Programme 0.3 Unknown 0.3
(Paid in full
by employers)
Retirement Benefit Programmes 5.7 Unknown 16
(equal contributions (10% for old-age
for old-age pension pension and 6%
and old-age savings for old-age
schemes) savings scheme)
Healthcare Benefits Programme 36 6 6
Total 9.2413.74 6.247.75 22.5423.75
SOURCE: Authors calculations.

and will presumably maintain their status as
profit-seeking state-owned enterprises (Persero).8
These four social security companies would
benefit from a de facto monopoly since no other
social security administrators can be appointed
unless a new law is adopted by the DPR (GOI
2004a, Article 5). The appointments are effective
immediately but these companies have to adjust
themselves to the new social security law within a
five-year period (GOI 2004a, Article 52).
The social security programmes are to be
operated on a national basis. There is no reference
to the regions, their role in implementing the
provisions of the law, or the possibility for a
region to create a new social security provider
agency. There is also a possible conflict with the
newly amended Regional Autonomy Law (Law
No. 32/2004), since article 22(h) of the regional
autonomy law states that in implementing
autonomy, regional government has responsibility
to develop a social security system (GOI
2004b). Thus, the social security law creates the
possibility of turf battles between central and
regional government in implementing social
security programmes for Indonesian citizens. In
addition, there might be conflicts with other
existing laws, such as the pension fund and
insurance industry laws, which would be
discussed in the next section.
With regards to the retirement benefits, the law
creates a two-tier pension programmes. The first
tier is the old-age pension programme, which is a
defined benefit (DB) pension scheme,9 which
presumably would operate on a pay-as-you-go
(PAYGO) scheme.10 Currently, only the pension
scheme for retired civil servants (Taspen) and
certain pensions plans sponsored by the private
sector are operating as DB pension schemes. Thus,
only a small number of Indonesian workers have a
DB pension plan at this time. As stipulated by the
draft law, for the next fifteen years or so, it would
only accumulate social security contributions, but
would not pay any pension benefits to retirees
(GOI 2004a, Article 41(4)).
The DB of the old-age pension would be a
percentage of the average income for the previous

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 year. The fixed minimum pension under the
proposed plan is calculated as 70 per cent of the
regional minimum wage (UMR). Widows and
widowers of workers and children of the workers
will receive a minimum pension between 40 per
cent and 60 per cent of the local minimum wage
(GOI 2003, pp. 5960). Widows/widowers of
workers will continue to receive pension benefits
until they died, have remarried, or start working
full-time. Children of workers will continue to
receive pension benefits until they are married,
start working full-time, or have reached twenty-
three years of age, whichever comes first (GOI
2004a, Article 41(1)).
The Indonesian retirement age is currently set at
the age of fifty-five, and a worker who has
contributed into the scheme for at least fifteen
years will be entitled to receive full pension
benefits from the programme. These workers, or
their survivors if the workers died before reaching
retirement age, will receive monthly pension
payments. Workers who retired before reaching
the fifteen years contribution requirement above
would be entitled to receive the accumulated
amount of their old-age savings contribution, plus
its investment returns, in a lump sum. However,
they would not be eligible to receive a monthly
pension (GOI 2003, p. 56; GOI 2004a, Article
41(2)).
The second retirement scheme is called the old-
age savings programme, which is a fully funded
compulsory savings programme operating on a
defined contribution (DC) basis.11 Thus, it is
similar to the compulsory savings programme run
by PT Taspen for retired civil servants and their
widows/widowers. This scheme has similarities
with mandatory individual retirement account
schemes in countries that have adopted a
secondary pension pillar as recommended by the
World Bank (1994), with one important exception:
the scheme will be run by a public social security
monopoly instead of private investment
companies, as recommended by the Bank.
The benefits of the old-age savings scheme
would be given as a lump-sum cash payment when
the workers die, suffer from a permanent
disability, or enter retirement age. If the workers
ASEAN Economic Bulletin
05 Arifianto 64
have died or are suffering from a permanent
disability, their survivors (spouses and children
under the age of twenty-three) would receive the
benefits. The total amount of programme benefits
received by members is the entire amount of their
contribution accumulated over the years, plus the
investment returns of their contribution. Workers
could start withdrawing their money from this
account after ten years of contributing into the
scheme (GOI 2004a, Article 36).
IV. Critical Analysis of the Social Security
Reform Law
IV.1 Are the Aims and Goals of the Law
Unrealistic?
First, the law seems to try to do many things at the
same time. On top of existing old-age savings,
work injury, and death benefits schemes, it creates
a new DB pension scheme and a National Health
Insurance scheme. Also, it sets a target for
eventual coverage of all Indonesians, especially
those who are working in the informal sector
within the next two decades or so. The goals of the
law are very ambitious indeed. In other countries,
the development of a national social security
programme was carried out over a long period of
time, starting from a small programme covering a
small number of workers, and gradually expanded
over many decades.
For example, when the United States enacted
the Social Security Act of 1935, it only provided
retirement benefits for private formal sector
workers. Gradually its benefits were expanded to
cover workers spouses and dependent children
(1939), work injury (1956), and health insurance
for citizens over the age of sixty-five (1965). Its
coverage were also expanded over the years to
cover agriculture, domestic, casual workers, and
finally civil servants in 1983 (U.S. Social Security
Administration 2003). In all, it took nearly fifty
years before social security benefits and coverage
in the United States were extended to the level it is
today. Expecting Indonesia (a developing country
unlike the United States) to be able to offer
comprehensive social security benefits to all its
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 citizens within the next decade or two is an
unrealistic proposition.
The task of extending social security coverage
to all Indonesians is further complicated by the
fact that about 70 per cent of Indonesian citizens
are working in the informal sector, where workers
employment records and payroll stubs are not
kept. Workers in this sector are also very mobile,
both in terms of their employers, occupations, and
the place they live. A worker who does farm
work in his/her village today might become a
construction worker in an urban centre next
month, and a few months later might move to
coastal areas to work in the fisheries sector.
Keeping records of workers with such
employment patterns would be a daunting task,
especially given that records do not exist in the
first place. Without accurate records, it would be
impossible to collect contributions and pay out
benefits to these workers. Apparently this fact was
not considered when the social security law was
passed, since the government did not specify how
it plans to address this issue.
IV.2 Would the System Be Financially
Sustainable?
Another reason why stakeholders were troubled by
the new law is the fact that during its drafting and
deliberation, no known actuarial calculations
detailing future contribution rates and benefits
payable under this scheme for the next few
decades were conducted. Nor have there been any
reliable economic analyses on the short- and long-
term impacts of this scheme on the labour market
and on the Indonesian economy in general.
Such analyses have always been an integral part
of the enactment of social security reform
legislation in other countries. Indeed, an actuarial
calculation showing the total revenues collected
by the national social security programme and
total expenditures paid to beneficiaries over a
period of 75 years is mandated as a part of the
U.S. social security legislation. Thus, the absence
of such analyses as part of the enactment of
Indonesias social security law was viewed with
concern by Indonesian stakeholders and raised
ASEAN Economic Bulletin
05 Arifianto 65
suspicions that the proponents of the legislation
decided not to perform the calculation because it
would show that the scheme they advocated would
not be financially sustainable after a few decades.
Without an accurate actuarial calculation, it
would be difficult to measure the future liabilities
(also known as the implicit pension debt12) of
Indonesias social security programme.
Experiences from other countries showed that the
amount of the implicit pension debt is very
substantial; OECD countries have an average
implicit pension debt exceeding 200 per cent of
their GNP (James 1997). A study from the
Philippines estimated that the implicit pension
debt of the countrys public pension scheme is
estimated to be about US$21 billion (about Rp200
trillion) (Capulong 2004).
We could predict that Indonesia, which has a
population about three times larger than the
Philippines, would have an implicit pension
obligation that would be much larger than the debt
incurred by the Philippines social security system.
Demographic estimates have shown that in line
with the international trend of population ageing,
the Indonesian population is expected to age very
rapidly within the next few decades. It is estimated
that Indonesians aged fifty-five years and older
will increase from about 10 per cent of the
population in 2000 (about 23 million) to one-third
by 2050 (about 100 million). At the same time, the
Indonesian population aged sixty-five years and
older will rise from 10 million in 2000 (4.5 per
cent of the population) to 60.5 million in 2050 (18
per cent) (U.S. Census Bureau 2004).
This shows that as more Indonesians are able to
live past the current mandatory retirement age of
fifty-five years, they would be eligible to receive
pension benefits prescribed under the law. These
retirees would receive a pension benefit that is
considered generous under Indonesian standard.
Since it would be closely linked with minimum
wage, at 70 per cent of current UMR rate, a
worker who live and work in Jakarta with current
minimum wage of Rp700,000 per month (about
US$75) would receive a minimum pension of
Rp490,000 per month at retirement.
Since there would be approximately 100 million
65 Vo l . 2 3 , N o . 1 , A p r i l 2 0 0 6
4/21/06, 9:57 AM
 Indonesian retirees living in the year 2050 and
assuming that each pensioner will receive a
monthly pension of Rp490,000, in 2050 the
Indonesian Government will have to spend Rp49
trillion each month (or Rp588 trillion per year,
equal to about US$61 billion) to fulfil these
pension obligations. With this enormous pension
obligations, it is highly questionable whether the
government would have adequate funds to pay the
pension benefits of every retiree under this
scheme when the bill becomes due forty-five years
from now. If the money accumulated in the pro-
posed social security trust fund were insufficient
to pay for this debt, the government would have to
either use the general state budget or engage in
further borrowing in order to pay for it.
The cost of bailing out insolvent social security
trust fund could be very substantial to
governments. European countries such as Austria,
Italy, and Hungary had to spend more than one-
third of their general revenue budgets towards
bailing out their failing public pension funds
during the 1990s (James 1997, p. 355). The
prospect of spending substantial funds to bail out
failing public pension scheme is a frightening
scenario for Indonesia.13 Thus, a careful second
look at the proposed scheme is needed to prevent
such a scenario from occurring.
IV.3 What Are the Impacts of the Proposed
Pension Scheme on the Indonesian Labour
Market?
Another frequent criticism of the law is that since
it mandates a somewhat high contribution rate
(between 22 and 23 per cent of workers payroll),
it would create significant financial burden for
employers and workers. The effect of the
imposition of higher contribution rate is similar to
the effect of a government-mandated increase in
the minimum wage. Since labour supply in a
competitive labour market is perfectly elastic,
employers could be expected to response to this
increase in social security contribution rates by
shifting such costs to their workers, in the form of
lower (or held constant) salaries, possibly even
reducing the number of workers employed.
ASEAN Economic Bulletin
05 Arifianto 66
A Social Monitoring and Early Response Unit
(SMERU) study on the impacts of minimum wage
increase in the urban formal sector in Indonesia
shows that for every 10 per cent in real minimum
wages, there will be more than 1 per cent
reduction in total employment, controlling for
other factors such as economic growth and growth
in the labour supply (Suryahadi et al. 2003). We
could expect that the higher social security
contribution rate would result in similar losses of
formal job opportunities, something that would
not be conducive for the new governments plan to
reduce unemployment by half, from the current
rate of about 9.7 per cent today down to 5.1 per
cent by the year 2009.
Additionally, the law seems to imply that there
would be a cross-subsidy from formal to informal
workers, indicative from the fact that formal
workers would pay the contribution rate by taking
a certain percentage deduction in their payroll,
while the informal workers would only pay a fixed
flat-rate amount of their salary (GOI 2004a,
Article 17, section 1). This would mean that the
contribution of the formal sector workers would
be set at a much higher rate than the informal
sector workers. For example, if a formal worker
earning a monthly income of Rp1 million per
month and is charged a 22.5 per cent contribution
rate,14 the amount of his wages that goes to pay
social security benefits would be Rp225,000. On
the other hand, an informal worker earning
Rp100,000 per month is only responsible in
paying Rp10,000 per month as social security
contributions, meaning that his contribution rate is
only 10 per cent of his wages. This shows that the
tax rate of informal workers is much lower than
their counterparts with formal sector employment.
As a result of this large gap between the
contribution rate of formal and informal workers,
there would be significant incentives for formal
workers to evade paying the full cost of their
social security contributions by switching to the
informal sector, while continuing to earn the same
earnings they receive as formal workers. Indeed,
international evidence shows that evasion has
caused significant problems in publicly run social
security programmes. For instance, while 72 per
66 Vo l . 2 3 , N o . 1 , A p r i l 2 0 0 6
4/21/06, 9:57 AM
 cent of the Philippines labour force are legally
members of the countrys social security scheme,
only about 28 per cent of these workers actually
paid their compulsory contributions (Capulong
2004). In Argentina, before the countrys pension
scheme was fundamentally reformed, more than
50 per cent of the countrys formal workers
evaded their social security contributions,
resulting in large budget deficits to the
government (James 1997). As long as the gap
between the formal and informal sectors social
security contribution continue to exist in
Indonesia, we could expect that many formal
workers will try to evade paying it, putting the
sustainability of the system in serious doubt.
In addition, attempts to collect social security
contributions from informal sector workers, both
in Indonesia and in other developing countries in
the past,15 have been very difficult, if not
impossible, to be carried out. This is because
many informal workers are very mobile both in
the type of jobs they undertake and in the place
they live. Thus, trying to find a particular informal
worker from one month to another to collect their
social security contributions could become a futile
exercise. In the end, many informal workers are
not covered by any social security schemes, either
because the tax collectors could not find them, or
because they failed to claim the social security
benefits they are entitled to even if they have
made some contributions into the scheme. As a
result, informal sector workers continue to be
excluded from the publicly sponsored social
security scheme, even though many argued that
they would be the ones who need social security
protection the most.
IV.4 Does the Law Promote Unfair Competition
in the Provision of Social Security in Indonesia?
Finally, the legislation disregards the role of
competition in providing social security benefits
for Indonesians. According to the law, social
security provision would become the sole
responsibility of the government, despite the fact
that most formal sector workers already have
adequate health and retirement benefits provided
ASEAN Economic Bulletin
05 Arifianto 67
by private pension and health insurance
companies. They either obtained such benefits
from their employers or personally purchased
them. Indeed, the private pension and health
insurance industry in Indonesia has been growing
rapidly since the enactment of the Laws on the
Insurance Industry and Pension Fund in 1992
(Laws No. 2 and No. 11/1992, respectively).
These laws were enacted to encourage the
development of private insurance and pension
industry in Indonesia by giving them sound legal
standing and also to strengthen the growing
financial market in Indonesia (McLeod 1993). It is
estimated that there are about 345 private pension
plans and over 500 private health insurance
plans in Indonesia at this time (First Initiative
2005; ILO 2003).
The companies providing these pension and
insurance plans could be made part of the nations
social security programme, making the industry
fully competitive and efficient, and providing the
highest returns of investments to participating
workers. Yet according to the law, the government
alone with the existing social security state
enterprises will continue to make decisions on
how the countrys social security fund is managed,
invested, and distributed among beneficiaries,
while workers as the real owners of this fund are
not allowed to participate in the decision-making
of the fund.
Evidences from other countries show that
entrusting the operation of the national social
security scheme (or the production of any goods
that could be provided efficiently and
competitively by the private sector) to the same
party that also regulates it (i.e., the government)
is a recipe for disaster. The government-run social
security programmes in these countries are always
prone to fraud, waste, and bad investment choices
made by bureaucrats, which will reduce the real
rate of return of these programmes to their
beneficiaries. This could be seen from the fact
that the rate of return of publicly managed pension
fund is much lower than that of a private plan.
While the return of privately managed pension
funds averages about 7 per cent per annum, the
average returns of publicly managed fund is
67 Vo l . 2 3 , N o . 1 , A p r i l 2 0 0 6
4/21/06, 9:57 AM
 1.8 per cent per annum, and if adjusted to the
growth rate in per capita income the returns would
be 8.4 per cent (Iglesias and Palacios 2000).
As described in section II of this paper, similar
situation has also occurred in the management of
Indonesias private formal workers social security
scheme run by Jamsostek. This fact, along with
anecdotes of mismanagement in Jamsostek that
seemed to be continually reported in the news
media,16 diminishes the confidence of most
Indonesian workers in the publicly run social
security scheme. Many of them would prefer to
have direct control over the investments of their
social security fund, chosen competitively from
different firms that offer social security coverage,
both public and private.17 Yet, the law as it is now
continues to deny the opportunity for these
workers to shop for the best social security
programme for themselves, by declaring the
government as the sole manager of workers social
security funds.
IV.5 Unholy Motives?
Indeed, many stakeholders are wondering if the
true intention of the government and the DPR in
passing this law is to help poor Indonesians to
achieve better social security protection. Many
have speculated that the real aims of the law
supporters is to create a huge fund outside the
state budget, an off-budget slush fund similar to
the forest conservation fund (dana reboisasi) and
the rice marketing board (Bulog) fund of the New
Order period. Despite their official rationales
on the creation of these funds (preserving the
environment, etc.), the proceeds were really used
for the personal use of certain high-level
government officials and also to fund financially
questionable projects proposed by their families
and cronies. Since the track record of the
government in managing these off-budget funds is
abysmal, there is a high burden of proof that has to
be passed through by the proponents of the law to
convince sceptical stakeholders that the proposed
social security trust fund would be different than
previous trust funds mentioned above. So far, the
supporters of this law have not showed this burden
ASEAN Economic Bulletin
05 Arifianto 68
of proof. Given the nature of the deliberation
of the law itself it was passed with little
consultation with the stakeholders and with total
disregard to their objections to the laws
provisions stakeholders fear about the true
intent of the law supporters might once again be
proven correct.
V. Policy Recommendations to Improve
Old-Age Security Provisions in Indonesia
Indonesia is at a crucial stage in its effort to
provide more adequate social security coverage to
its citizens and to reform its current social security
scheme so that it would work better for them. The
current social security system is not sustainable
and has not been successful in providing adequate
benefits to the workers covered by it, because of a
relatively low rate of workers participation in the
scheme, low rate of returns of the national social
security fund, and poor management of the
scheme. Therefore, many parties acknowledged
the need for a fundamental overhaul of the system.
Unfortunately, the current Indonesian social
security reform proposal as stated in the National
Social Security System Law would generate a new
pension scheme that would be too generous and
could endanger the fiscal sustainability of the
government. The legislation does not take into
account rapid ageing projections of Indonesians
that would start to occur within the next few
decades, which could put additional fiscal strain
on the government. It might also worsen the
conditions of Indonesias labour market,
contributing to more formal sector job losses
and creating incentives for workers to remain in
the informal economy. Finally, it also ignores
the potential for poor governance and misuse
of the social security trust fund, as indicated by the
misuse of previous trust funds set up by the
government in the past.
Internationally, there is a consensus among
economists and policy-makers that publicly
managed social security scheme is no longer
viewed as an ideal system to finance workers
social security. Many of these countries have
pursued other alternatives to achieve universal
68 Vo l . 2 3 , N o . 1 , A p r i l 2 0 0 6
4/21/06, 9:57 AM
 social security coverage for their citizens and at
the same time maintain competition and choice in
the provision of their social security programmes.
Social security financing and provision should no
longer be regarded as a government monopoly.
Recent experiences from various countries have
shown that private sector involvement in the
provision of social security benefits would
positively improve service delivery, promote
competition and innovation that would improve
social security provision and, in the end, improve
health and retirement outcomes of the
programmes members (Fox and Palmer 1999).
More than twenty developed and developing
countries (see Figure 1) have introduced reforms
to overcome the financial problems inherent in the
defined benefit pension scheme. Recent reforms
adopted in many other countries are built around
three pillars that provide old age pension
benefits to their citizens.18 Indonesia could learn
from these international experiences with pension
reforms. The three-pillar strategy, which will
diversify the risk of the private sector, is based on
the following principles:
The first pillar is a publicly managed
programme that provides for a social safety net.
This resembles existing public pension plans
such as Jamsostek but with a much smaller size
and focusing solely on redistribution, providing
a social safety net for the old, particularly those
whose lifetime income is low.
The second pillar is a fully privately managed
programme that handles peoples mandatory
retirement schemes and insurance. It links
benefits to contributions as in a defined con-
tribution plan, whereby the workers pension is
linked to his/her contributions plus the return
on investment. This programme is fiscally
sustainable in the long run as benefits are tied to
workers contributions and, therefore, avoids
possible costly bailouts from the state budget.
The third pillar is a voluntary savings scheme
for people who want more consumption in old-
age strategy. The central idea is to create a
credible mechanism for individuals to commit
to their long-term retirement planning by, for
instance, imposing penalty for early withdrawal.
Because of its importance, the government

FIGURE 1
Countries that Have Adopted Mandatory Privately Managed Social Security Scheme as
their Primary Social Security Plan, 19822000
80

Hong Kong
70
Hungary El Salvador
Kazakhstan Poland
60 Bolivia
Argentina Mexico
50 Australia Uruguay
In millions

Colombia
United Kingdom Denmark
40
Peru

30
Switzerland
Netherlands
20

Chile
10

0
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

SOURCE: James (2004).

ASEAN Economic Bulletin 69 Vo l . 2 3 , N o . 1 , A p r i l 2 0 0 6

05 Arifianto 69 4/21/06, 9:57 AM

 should appoint sound and reputable banks for
this scheme. Furthermore, sufficient incentive
should be created to attract people to join the
scheme through, for example, personal income
tax deduction and the possibility of using the
savings for investment.
Workers and employers should be given the
option to choose a social security programme that
is suitable for their own needs. The government
can design a compulsory social security
programme for its citizens, but it is not necessary
for the programme to be run as a monopoly. The
programme can be run either by the public and
private sector. However, experiences show that the
programme would earn better returns for its
participants if it is run by the private sector. The
three-pillar option includes both public and private
sector management. This is a safer social security
policy as it diversifies risk among different
providers, rather than accumulate all risk in one
provider.
The government could play an important role in
the provision of social security in two additional
ways:
(1) Ensure the implementation and enforcement
of necessary regulations and establish
financial prudential regulations for pension
funds.
(2) Provide a separate social assistance pro-
gramme to help the poorest citizens who are
no longer able to work, which could be
funded through general taxation.
As seen from Figure 1, many countries have
succesfully reform their public pension schemes
using the three-pillar paradigm, improving
confidence of workers in the scheme, increasing
their investment returns, and improving the
schemes governance (Fox and Palmer 1999).
Judging from the success of these countries, the
Indonesian Government should seriously consider
transforming its public pension scheme into a
privately and competitively managed pension
scheme based on the three-pillar paradigm.
In fact, Indonesia already has a foundation for an
individual retirement account scheme. The current
ASEAN Economic Bulletin
05 Arifianto 70
retirement savings scheme run under the Jamsostek
programme is in many ways similar to individual
retirement accounts in many countries since these
schemes are fully funded DC schemes with no
income redistribution between different workers.
The only major difference is that the existing
scheme is managed by a government entity
(Jamsostek), while the schemes in the other
countries are managed by private financial firms
chosen competitively by the workers themselves.
While the current Jamsostek scheme suffered from
many governance and managerial problems, it is
estimated that these problems would be minimized
if it were run under private management.
However, it is also recognized that relying solely
on earnings from private individual retirement
accounts might not be sufficient to meet the
retirement expenses of some workers, because they
would not have accumulated sufficient funds
available in their accounts for use after retirement
and because their lifetime income was too low.19
The government should pursue a special income
support programme to assist this group in meeting
their retirement expenses.20 The amount of
assistance provided by this programme would meet
the basic expenses of these poor elderly (for
example, food and utility bills) and also would
provide emergency assistance when the elderly
faces chronic health problems. Such programmes
should ideally be financed through general tax
revenues so that it would not create additional
burden to businesses and current workers through
new taxes or fees. To ensure that the funds allocated
for this income support scheme would be
effectively spent, the government could subcontract
the delivery of such funds to private banks or to
not-for-profit non-governmental organizations
(NGOs).21 This special pension for the poor could
be given either as a means-tested pension scheme or
as a universal flat benefit scheme.
A means-tested benefit takes all income and
assets into account for eligibility. The means-tested
programme for the elderly is integrated
with means-tested programmes for the general
population, the main difference being the
presumption that a young person can work
productively while an elderly person could not, so
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4/21/06, 9:57 AM
 there is less concern with work incentives in the
old-age programme. Countries that have adopted a
means-tested pension benefit for the elderly
include Australia, Hong Kong, and South Africa
(James 2004, pp. 4649).
Some developed countries such as the
Netherlands, Denmark and New Zealand, pay a
flat benefit, uniform for every old person who
resides in the country. Many developing
countries such as Botswana, Mauritius, Namibia,
and Nepal offer more modest universal flat
benefits. In most of these countries the universal
flat benefits are financed out of general revenues
(ibid., pp. 4950).
Finally, we should recognize that historically
most of the financial assistance provided for
elderly Indonesians comes from their own
families. Thus, there should be incentives to
ensure the long-term sustainability of these family
support arrangements as the country continues its
path of development.22 This might include efforts
to create new employment for Indonesian workers,
preferably in better-paying sectors, combined with
efforts to attract new investors to the country that
would generate such jobs. The country might also
consider introducing tax incentives to encourage
families to care for their aged relatives and to
lessen the financial burden of these families.
Finally, training should be provided for families of
sick and infirm elderly, who suddenly have to bear
the burden of caring for them, so that they are able
to provide appropriate and humane care for their
elderly relatives.
VI. Concluding Remarks
While the official intention of the National Social
Security System Law is to extend social security
NOTES
The author would like to thank his SMERU colleagues, Dr Sudarno Sumarto, Dr Asep Suryahadi, and Mr Bambang
Sulaksono, for their suggestions in drafting this paper. The author also benefited extensively from the comments
given by Dr Ross McLeod, Dr Estelle James, and two anonymous reviewers on earlier versions of this paper. All
errors and omissions are the sole responsibility of the author.
ASEAN Economic Bulletin
05 Arifianto 71
coverage to all Indonesians, especially the poor
working in the informal economy, the means to
achieve it would be based on a compulsory
taxation scheme collected from workers wages,
and the programme would continue to be be run
as a government monopoly. Experiences, both
internationally and within Indonesia during the
past thirteen years the Jamsostek scheme has
been implemented, showed that this scheme is
destined to fail. It would create substantial
economic burden for employers and workers,
which would motivate them to evade the scheme,
create significant fiscal burden to the Indonesian
government and taxpayers, and because it would
be managed by state-run monopolies and, run
contrary to market principles. Indeed, when most
other countries in the world is looking to reduce
the role of their government in providing social
security coverage for their citizens and to rely
more on the private sector to provide such
coverage, Indonesia is moving backwards,
relying on the same scheme that has been proven
to fail in other countries. If reforms are not
implemented immediately to reverse this cost,
Indonesia would pay dearly, financially,
economically, and politically, within the next
few decades.
The current Yudhoyono government should
proceed immediately to overhaul this social
security law and replace it with one that would
maintain the countrys fiscal sustainability and
promote economic growth. It should also
encourage the role of private competitive market
in assisting Indonesia to meet the goal of
providing social security coverage to all
Indonesian citizens and helping to create social
security provision that truly would work for
all Indonesians.
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 1. Non-retirement schemes created by the new law (such as the national health insurance, disability, and death
benefits) would not be analysed in this paper.
2. Workers who have pension coverage tend to be civil servants (covered by the Taspen scheme) or those working
with state-owned enterprises and large companies (ILO 2003). In addition, some private sector workers also
contribute to the compulsory old-age savings scheme (Jamsostek).
3. Specifically, 10 per cent are covered by a public health insurance scheme (Askes for civil servants, Jamsostek for
private formal sector workers, and community health maintenance schemes (JPKM). About 5 per cent have
private health insurance coverage (ILO 2003).
4. In addition to Jamsostek for private formal sector workers, there are other publicly sponsored retirement scheme
such as Taspen (for civil servants) and Asabri (for members of the armed forces). However, due to their relatively
small size, they would not be discussed in this paper. See Perwira et al. (2003) and Arifianto (2004) for further
details regarding these schemes.
5. Including the requirement for employers to pay a bonus equivalent of one months wages for the Idul Fitri
holiday, employers are required to pay about two months wages per year in addition to normal salaries.
6. The minimum wage in Indonesia is decided not at the national level, but at provincial and sometimes at district/
city level. The minimum wage is commonly called the Regional Minimum Wage (Upah Minimum Regional, or
UMR).
7. The contribution rate of informal workers would be a fixed, flat rate contribution based on a fraction of their
salary, to be determined later in a future government regulation.
8. The original draft of the National Social Security Law envisioned that these agencies would be converted into a
single social insurance agency, which would have been a non-profit entity. However, this proposal was dropped
in the latter version of the draft.
9. The DB scheme is a retirement plan in which workers are guaranteed a benefit upon retirement, usually based on
years of service, age, and final or lifetime earnings. The funding of the plans liabilities (promised benefits) and
the risks associated with the scheme become the responsibility of the employer/government (ILO 2003, p. xxii;
Weller 2002, pp. 34).
10. The PAYGO system is a social security system in which no funds are set aside in advance and benefits for
current retirees plus administrative costs are paid from current workers contribution (ILO 2003).
11. The DC scheme is a retirement plan in which only the contribution rates and bases of benefits calculations are
determined in advance (not the benefit level). The benefit is a direct product of the contributions paid to the
investment accounts, plus return of investments from these accounts. The risks, but not the control, of this
pension scheme rest with the workers (ILO 2003, p. xxii; Weller 2002, pp. 34).
12. Implicit pension debt is the present value of amounts promised to current retirees and workers enrolling in a
pension scheme (James 1997, p. 356).
13. Indeed, section 48 of the social security law states that the government could perform special actions in order to
secure the level of financial health of a Social Security Provider Agency (GOI 2004a). This clause is commonly
interpreted as a bail-out clause that would be carried out if the social security scheme is facing serious financial
problems or insolvency.
14. It is assumed that employers are able to fully shift the cost of their social security contribution to their workers.
Thus, workers are responsible of paying the full cost of their social security taxes, regardless of what the law
stipulates.
15. In 2002/03, PT Jamsostek conducted a pilot project that attempts to collect Jamsostek contributions from
informal sector workers. However, due to the many difficulties it found in collecting contributions from them, it
has quietly postponed this project.
16. Examples of alleged misuse of Jamsostek fund range from the construction of the Jamsostek Tower (Menara
Jamsostek) office building in the Kuningan area to stories about Jamsostek investment in the bankrupt Bank
Global that was revealed earlier this year (Tempo Interactive, 4 January 2005).
17. This is reflected from the authors personal communications with various representatives of the Indonesian
employers associations (KADIN and APINDO) and labour unions. Of course, it is not surprising for employers
to favour a private social security system over a public one. However, the fact that many Indonesian labour union
leaders favour it as well shows workers great lack of trust in the public social security scheme such as
Jamsostek.
18. For further details on the three-pillar social security system, see World Bank (1994).
19. The World Bank has recognized this in its most recent review of pension reform worldwide and has expanded the
three-pillar social security system into a five-pillar system. For details, see Gill et al. (2005).

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 20. This is called the zero-pillar under the new World Banks social security paradigm (Gill et al. 2005).
21. For examples on how this is done in other developing countries, see Help Age International (2004).
22. Gill et al. (2005) has called family support as the fifth-pillar of the new World Banks social security paradigm.

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Alex Arifianto was a policy analyst at the Social Monitoring and Early Response Unit (SMERU) Research Institute
in Jakarta until August 2005. He is currently pursuing his postgraduate study at the School of Advanced International
Studies, Johns Hopkins University in Washington, D.C.

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